Factors Affecting Acquisitions Decisions
When a company owns and runs a business, the parties can decide whether to transfer the business by selling all of the company's shares or by selling the underlying assets that make up the business. The parties may hold divergent opinions about the best structure for the acquisition. This is due to the fact that what is advantageous to one party may be disadvantageous to another in relation to a number of the elements that affect the choice of how to continue. The owners of a firm will frequently want to sell their shares, whereas a buyer will frequently prefer to purchase the business's assets directly from the company, however this is very much a generalisation. In these circumstances, the result is probably going to depend on how strong each party's negotiating position is. Before examining the benefits and drawbacks of both acquisition types, it is important to note that there will be circumstances in which the parties may not have a realistic choice. This will be the situation, for instance, if a corporation has several distinct businesses (perhaps run as independent "divisions"), but the buyer only wants to purchase one of them. In this case, unless the parties are willing to adopt a hive-down structure, the deal must proceed as an asset sale.
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